Thank you, Uber

Photo of Amir Paz-Fuchs
Amir Paz-Fuchs

This post is by Amir Paz-Fuchs (Professor of Law and Social Justice at Sussex Law School). It reflects upon the recent UK Supreme Court judgment on the status of Uber drivers and the implications this has for workers more broadly.

On the 19th of February, the UK Supreme Court delivered its long-awaited decision in Uber v Aslam, a case which, as I wrote here over four years ago (!), involves the seemingly simple question: are Uber drivers actually Uber drivers? My original post followed the Employment Tribunal’s ruling in favour of the drivers, and since then Uber has employed its resources, exhausting all available avenues, and (in a fashion exercised by a certain former President) proudly lost consistently first before the Employment Appeals Tribunal, then before the Court of Appeal, and finally, at the hands of the Supreme Court.

It is tempting to admonish a multibillion dollar, multinational company for deploying its resources to deny its workers access to their statutory entitlements for almost five years. And yet, a positive spin on Uber’s decision to do so may be the fact that, in defending an extremely weak case (for Uber), it paved the way for a court which is not consistently a friend of the working person to advance the jurisprudence concerning employment status and employment rights. Moreover, it did so in a manner that could well be important beyond the individual claimants, beyond Uber (although the ramifications for Uber are quite significant), and even beyond the gig economy.

Why is this so? For two main reasons, but let us start with a quick recap.

We can remind the reader that Uber sought to classify its drivers as (wait for it) Customers, and that is how they were referred to in the agreement between Uber and the drivers. In case you wondered, the clients of the service are not ‘Customers’, but rather ‘Users’. As such, Uber presented itself simply as an app, which brings together ‘Customers’ and ‘Users’, but plays no part within that relationship. Needless to say, just as other apps have no employment relationship with their users, so Uber (according to its claim) did not have such a relationship with its drivers. Of course, this could potentially be the case and Uber sought to position itself as akin to a virtual booking agent.

However, as the Tribunals and Courts showed in details, Uber actually controlled a wide range of the relationship in which it claimed it played no part (at [94]-[100]): first, it set the price (unlike a booking agent) which was charged by Uber, with no direct communication-enabled (or even permitted) between the driver and the passenger. Second, it monitored the driver’s rate of acceptance and cancellation of trip requests. A low rate of acceptance, or high rate of cancellations, would lead to sanctions in the form of ‘logging the driver off’ the system. Third, Uber runs a system whereby passengers rate the drivers, and a low score may lead to penalties and, eventually, to termination of the relationship. Fourth, Uber vets the type of cars that may be used, and the quality of the service. It also instructs the driver, through its built-in app, which route to take. Whilst the driver may decide to take a different route, s/he then bears the risk of a passenger refusing to pay because the driver deviated from the prescribed route. Fifth, and finally, Uber restricts communication between the driver and the client beyond the individual ride. Not exactly a typical booking agent.

We now reach the first important, and potentially far-reaching, judicial development here. For the Court, the control that Uber exerted over the drivers set the default position for the judicial approach that followed. In particular, it drew a clear line between the extent of the control and the worker’s vulnerability and from there, consequently, the worker’s need for protection through employment status and rights. Citing (at [75]) the Canadian Supreme Court case of McCormick v Fasken Martineau DuMoulin LLP 2014 SCC 39, it proclaimed that: ‘The more the work-life of individuals is controlled, the greater their dependency and, consequently, their economic, social and psychological vulnerability in the workplace’. And then, in its own words (at [88]): ‘The greater the extent of such control, the stronger the case for classifying the individual as a “worker” who is employed under a “worker’s contract”’.

The second pronouncement concerned the interpretation of what is arguably the most important case on employment status in the last decade – Autoclenz v Belcher [2011] UKSC 41. Very quickly: in this case, car valets who worked for Autoclenz on a piecework basis, had to buy their own uniforms and materials from Autoclenz and paid tax and National Insurance contributions as self-employed contractors. Crucially, their contract dictated that the relationship was that of client and independent contractor, and not an employment relationship. It also included a ‘substitution clause’, which would allow a ‘contractor’ to engage others to work on his or her behalf. Such a term is routinely viewed as undermining the employment relationship.

However, the Supreme Court accepted that the workers were not aware of their supposed right to employ substitutes, that none of them had ever done so, and thus the contract did reflect the true agreement of the parties. The Supreme Court accepted Sedley LJ’s opinion, in the Court of Appeal, which could easily have been written about Uber: ‘the elaborate protestations in the contractual documents that the men were self-employed, when examined, bore no practical relation to the reality of the relationship’. Crucially, then, when the reality of the situation is distinct from the contractual arrangement, the court should take account of the inequality of bargaining power and view the contractual arrangement as a contractual sham which should be ignored.  

Back to Uber, then. Uber submitted that Autoclenz created a default position according to which the contractual arrangement should be respected unless there is clear evidence to the contrary, and in this case, no such evidence was presented. The departure was allowed, as noted, because of the clear inequality of bargaining power that allows the employer to dictate the terms of the contract, rendering it more as ‘take it or leave’ than one that results from true negotiation.

Lord Leggat accepted this rationale, but added an additional, crucial one, which he candidly notes ‘was not … fully spelt out in the judgment’. Accordingly, the justification for departure from the contractual construct is strengthened considerably because of the nature of the rights asserted by the claimants: these are not contractual, but rather statutory rights, created by legislation (national minimum wage and annual leave).

In such situations, a ‘purposive’ approach to the interpretation is necessary to ensure that vulnerable workers are protected. Further, since established that the control over the drivers’ terms and conditions increases their vulnerability, a purposive interpretation of the relevant legislation would require applying its provisions in this case, regardless of the contractual protestations to the contrary. The Court explains, very clearly, that to allow the employer to create a different default position (according to which no employment status is recognised) through contractual terms would seriously undermine statutory protection. Doing so ‘would in effect be to accord Uber power to determine for itself whether or not the legislation designed to protect workers will apply to its drivers’ [77].

And so, while the contractual terms cannot be ‘ignored’, the Court continued to explain, in a manner more far-reaching than it ever did, previously, that

there is no legal presumption that a contractual document contains the whole of the parties’ agreement and no absolute rule that terms set out in a contractual document represent the parties’ true agreement just because an individual has signed it. Furthermore, as discussed, any terms which purport to classify the parties’ legal relationship or to exclude or limit statutory protections by preventing the contract from being interpreted as a contract of employment or other worker’s contract are of no effect and must be disregarded.            [emphasis added]

And so, to recap: in this case the UKSC, faced with a judicial version of David and Goliath on steroids, not only chose to stand with David, but set the grounds for future Davids (and Devorah, but maybe we can stop stretching the biblical analogies). It removed the default position of contractual authority, which gave employers a clear advantage, and even positioned its finger on the scales in favour of workers who manage to establish their vulnerability in a relationship. A good day for the precariat, so thank you, Uber.

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